When People Make Choices That (At the Time and with the Information

question 35

Multiple Choice

When people make choices that (at the time and with the information they have at their disposal) give them the greatest amount of satisfaction,they are said to be:

• A)behaving irrationally.
• B)applying econometric models to their everyday behavior.
• C)living under a communist dictator.
• D)acting in their own rational self-interest.
• E)showing no willingness to plan for the future.

---

Definitions:

NPV

Net Present Value; a method used in capital budgeting to assess the profitability of an investment or project, calculated by subtracting the present value of cash outflows from the present value of cash inflows over a period of time.

NPV

NPV, or Net Present Value, is a financial metric used to evaluate the profitability of an investment, calculated by subtracting the present value of cash outflows from the present value of cash inflows over a period of time.

Cost of Capital

The rate of return a company must earn on its investment projects to maintain its market value and attract funds.

Investment

The act of allocating resources, usually money, with the expectation of generating an income or profit.